SAS® software supports efficient logistics at Amway China

NRF 99th Annual Convention and EXPO, NEW YORK – Using predictive modeling and inventory optimization technologies from SAS, the leader in business analytics software and services, Amway China has developed an advanced Inventory Optimization System (IOS) built with SAS® Forecast Server, SAS® Inventory Optimization and SAS® Enterprise Guide that has cut stock levels, balanced product distribution, and boosted customer satisfaction to 97 percent. Launched in June 2009, the system enormously improves Amway China’s operational efficiency and shortens replenishment time from the logistics center to retail outlets by 20 percent.

China has become Amway’s largest market, with more than a third of Amway Global’s total sales: Amway China’s 2008 sales revenues soared to CNY 17.9 billion (US $2.6 billion). Amway China ships more than 1,000 different products through 229 stores, 29 home delivery centers, 22 warehouses and a 40,000-square-meter logistics center in Guangzhou. Each year, the company transports products more than 13.96 million km, equal to about 349 times around the earth. Amway’s uniquely diversified “store selling + direct selling + distribution” model – plus frequent marketing promotions that react quickly to market changes – make inventory management a particular challenge that demands flexibility in workflow and among workers.

In order to coordinate fast business growth and adapt information flow to the rapid development of its enterprise supply chain, Amway China decided to expand its current application of business analytics, importing SAS® technology into its supply chain management under a new IOS.

Using SAS, Amway China’s IOS achieves four significant improvements:

* Multilevel prediction of product demand. Applying advanced SAS time series forecasting, the IOS collects and analyzes data from 70 million orders over the past three years. Based on relevant historical sales data, the system automatically analyzes, models, executes and adjusts predictions for products and regions at different levels, and determines demand by specific product and outlet.
* Intelligent transport schedule. Based on predicted customer demand, the system calculates the replenish frequency of different regions per the optimized model. Meanwhile, taking into consideration transport data related to vehicle type, capacity and costs, the system determines the optimal transport schedule for the following week, which is displayed directly in the system.
* Optimal inventory replenishment policy. IOS fully considers Amway’s multi-level replenishment network – factories, logistics centers, outside warehouse and stores – alongside other influencers including predicted demand and product variation, lead time, packing specifications, inventory costs, transport costs, transport frequency, customer service level, inventory strategy and minimum orders. The result is a more accurate and dynamic replenishment policy for reorder, order-up-to and required quantity levels that can pinpoint each product in each warehouse and store, adjusting dynamically to market changes over time.
* Indicators analysis and alerts: The IOS provides KPI (key performance indicator) reports and emergency and alert functions necessary for daily inventory management, including inventory level analysis, procurement proposal analysis, inventory alarm, analysis for items temporarily out of stock, transport no-load rate, and supervision and control over product sales.

Amway has high praise for both the technology and services from SAS. Raymond Hui, Amway Greater China Distribution Vice President, says, “With SAS predictive analysis and inventory optimization, we can keep inventory at the right level at the right time. When business or customer demands change, we can quickly adjust via the flexible inventory optimization system. With the IOS, Amway China can not only reduce logistics costs, but also enhance customer satisfaction and improve its competitive edge.”

“It is a shared goal for excellent enterprises to offer superior customer service via optimal inventory level. Amway leads its counterparts,” says Alex Wong, General Manager of SAS Greater China. “SAS will, as always, provide Amway and other clients with quality products and professional services that help them make fact-based decisions by effectively using relevant data to elevate customer satisfaction and enhance their earning capacity.”

The inventory optimization solution developed by SAS can help companies predict future customer demand and accurately determine optimal inventory, thus lowering inventory costs, shortening response times and promoting customer satisfaction. A host of leading companies in the automobile, retail and other industries have adopted SAS for inventory optimization.

In addition to Amway China, SAS retail customers include Aeropostale, AutoZone, Bakers Footwear, Brooks Brothers, Burger King, Cabela’s, Carrefour, Casino, Casual Male, The Children’s Place, Eddie Bauer, Family Dollar, Hallmark, Hudson’s Bay Company, JCPenney, Kohl’s, Luxottica Retail, Macy’s, Mark’s Work Wearhouse, Marks & Spencer, Northern Tool & Equipment, Office Depot, Sainsbury’s, ShopKo, Sport Chalet, Spiegel Brands, Staples, Tesco, Tilly’s, Tween Brands, Waitrose, Wakefern, Williams-Sonoma and 1-800-FLOWERS.COM.

For more information about SAS® Retail Intelligence Solutions and SAS Customer Intelligence Solutions, visit http://www.sas.com. SAS is demonstrating its solutions at the NRF 99th Annual Show and EXPO in Booth 1337.
About Amway China

As a branch of Amway Global, a world-famous company dedicated to direct selling, Amway (China) Co., Limited is a large cosmetic producer with diversified marketing modes. Starting operation in 1995 with total investment of US$ 220 million, Amway (China) has headquarters in Guangzhou and regional offices in Beijing and Shanghai and more than 6,000 employees in China. www.amway.com.cn

About SAS
SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions delivered within an integrated framework, SAS helps customers at more than 45,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world The Power to Know®